Pharmacological agents are being developed to modulate phosphotyrosyl (pTyr)-dependent cell signalling. Emphasis is on inhibitors of pTyr-dependent binding interactions which are mediated by "src homology 2" (SH2) domains or "phosphotyrosine-interaction domains" (PIDs) and on protein-tyrosine phosphatase (PTP) inhibitors. Central to both of these efforts is the development of new pTyr mimetics which afford either increased stability toward enzymatic degradation by PTPs or increased affinity. Among SH2 domain-directed ligands developed during the reporting period are heteroaryl-containing pTyr mimetics based on the structure of the differentiating antibiotic azatyrosine, which are designed to afford higher affinity and specificity. Additionally, a new amino acid has been prepared, which effectively constrains a tyrosyl residue to the conformation required for binding to an SH2 domain, as determined by x-ray crystallography. A major obstacle to SH2 inhibitor development is poor cellular penetration of inhibitors due to the requirement for high binding affinity of either a pTyr or other doubly ionized residue. Work is currently underway to prepare a new class of peptidomimetics as SH2 domain inhibitors which do not require this doubly-charged pTyr pharmacophore. In the phosphatase area, new PTP inhibitors have been designed and synthesized based on the x-ray structure of our lead small molecule inhibitor bound to the PTP1B enzyme. A 100% increase in affinity relative to the parent inhibitor has resulted for the first analogue in the series. Additional peptide-peptidomimetic hybrids have been prepared using solid-phase chemistry. Collaborations are in place to determine x-ray structures of new inhibitors bound to relevant phosphatases, and to utilize this information for the design of a new generation of inhibitors having enhanced binding interactions.